The Rise Of The Female Trader

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There was a time when trading stocks and currencies was viewed as a solely male pastime. The macho image of the suited trader radiated from Wall Street trading floors and it was thought that this would remain the case in years to come.

Women are now active in boardrooms around the world, making multi-billion dollar decisions on a daily basis. Is the world of trading ready to move in the same direction or is it missing out on a sizeable customer base? Today, we are looking at the rise of the female trader, their success and the characteristics they bring to the market.

The Science

Researchers at the University of Leicester found that male traders on average earn less than females, but, as they were more comfortable taking bigger risks, were perceived to be more profitable.

In previous research, hormones such as testosterone found in males, were linked closely to risk taking and even irrational decisions. In fact, hormone levels have been shown to be affected by trading outcomes and males may be more sensitive to this effect than females. This has actually led policy makers to call for a rebalance of gender ratios in the financial markets in order to make them more stable. It also indicates that female traders may make better decisions than males so it is only the absence of risk taking which may hinder their potential profits.

The Characteristics

So we covered the fact that women may are generally more rational on the trading floor but what other advantages does the female trader have?

Women are great at multi-tasking. And they do it better than men. Watch as female traders juggle multiple positions, monitor financials, metals, techs, commodities, retailers and penny stocks on multiple time frames.

OK, sometimes stereotypes exist for a reason. Women really do talk more than men, at least about their emotions. And talking about feelings isn’t just an activity best reserved for dissecting The Notebook. It may have a powerful effect on your trading, too. Why do you think Lucci posts his thoughts everyday?

Of course women are competitive, and of course they have egos. But in general, female traders may have bigger motivations. Or at least they don’t peg their self worth to their bank accounts. This may explain a more level headed approach to trading.

The Reality

There are not a lot of women on the trading floors of investment banks – in fact only around 15% of institutional traders are female. The situation is even worse at major hedge funds where the percentage may be as low as 6%. This may be due to the perceived lack of risk taking from the female gender but does being a female trader really equate to less profit?

“We found that men take more risk than women,” says Financial Skills COO David Hesketh. “That would be fine if they also made more money – but they don’t.”

Women CEOs are still too few, but they outperform their male counterparts, without making headlines for bad behaviour!

So Why Aren’t Women Trading Professionally?

One reason why women may not choose to favour a trading career is the aforementioned macho stereotypes. It may be seen as a rough or tough industry where women may not be comfortable to fit in amongst the “locker room” banter.

Another main reason is of course the remuneration and bonus schemes which may be unlikely to favour women.

According to the University of Leicester paper: “Even though male traders may underperform female traders and make profits less often, reward schemes in financial firms may still select towards large groups of male traders.”

Gender equality is necessary for a success in the trading world, so many firms, such as Allianz have created senior female leadership initiatives. Their spokesman explained: “These include unconscious bias training, networks that offer support to female colleagues and, ensuring transparency of promotion and recruitment processes.”

Still don’t believe that women may trade aggressively, take hits, and live large? Follow this winning trader on Twitter, and you might change your mind. Follow @easyMarkets for more articles, news and trading tips.

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